06 January 2009
sir, here we have formed a pvt ltd co. having 2 directors but now we want to remove the 2nd director by filling form 32 for his mismanagment of company & appoint new director also
can 2nd director back in company without directors permission ? if yes then how can we stop him to get in to companys matter ? thanks kaustubh
07 January 2009
u can remove the director by follwing procedure laid down under sec. 284
S. 284. Removal of directors.- (1) A company may, by ordinary resolution. remove a director (not being a director appointed by the Central Government in pursuance of section 408) before the expiry of his period of office:
Provided that this sub-section shall not, in the case of a private company, authorise the removal of a director holding office for life on the 1st day of April, 1952, whether or not he is subject to retirement under an age limit by virtue of the articles or otherwise:
Provided further that nothing contained in this sub-section shall apply where the company has availed itself of the option given to it under section 265 to appoint not less than two-thirds of the total number of directors according to the principle of proportional representation.
(2) Special notice shall be required of any resolution to remove a director under this section, or to appoint somebody instead of a director so removed at the meeting at which he is removed.
(3) On receipt of notice of a resolution to remove a director under this section. the company shall forthwith send a copy thereof to the director concerned- and the director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting.
(4) A-here notice is given of a resolution to remove a director under this section and the director concerned makes with respect thereto representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so,
(a) in any notice of the resolution given to members of the company state the fact of the representations having been made; and
(b) send a copy of the representations to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representations by the company):
and if a copy of the representations is not sent as aforesaid because they were received too late or because of the company's default. the director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting:
Provided that copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the 1[Company Law Board] is satisfied that the rights conferred by this subsection are being abused to secure needless publicity for defamatory matter; and the 1[Company Law Board] may order the company's costs of the application to be paid in whole or in part by the director notwithstanding that he is not a party to it.
(5) A vacancy created by the removal of a director under this section may, if he had been appointed by the company in general meeting or by the Board in pursuance of section 262. be filled by the appointment of another director in his stead by the meeting at which he is removed, provided special notice of the intended appointment has been given under sub-section (2).
A director so appointed shall hold office until the date up to which his predecessor would have held office if he had not been removed as aforesaid.
(6) If the vacancy is not filled under sub-section (5), it may be filled as a casual vacancy in accordance with the provisions, so far as they may be applicable, of section 262, and all the provisions of that section shall apply accordingly:
Provided that the director who was removed from office shall not be reappointed as a director by the Board of Directors.
(7) Nothing in this section shall be taken
(a) as depriving a person removed thereunder of any compensation or damages payable to him in respect of the termination of his appointment as director or of any appointment terminating with that as director; or
(b) as derogating from any power to remove a director which may exist apart from this section.
Scope of section: The section is general and applies to all directors by whomsoever, under whatsoever provision and in whatsoever manner appointed, and includes all those not retiring by rotation, except a director appointed by the Central Government under section 408. It applies to permanent directors or life directors, and directors appointed for a fixed term even though they might have been appointed by the articles or otherwise. It also applies to directors appointed by debenture-holders and other creditors by virtue of any agreement with them. But directors appointed by the Central Government under section 408. It applies to permanent directors or life directors, and directors appointed for a fixed term even though they might have been appointed by the articles or otherwise. It also applies to directors appointed by debenture- holders and other creditors by virtue of any agreement with them. But directors appointed by the Central Government under section 408 of the Act or by the Financial Institutions referred to in the Notes under section 255 cannot be removed except by the authorities who had appointed them as in all such cases it is statutorily provided that the appointments are to have effect notwithstanding anything in the Companies Act, 1956. The right under the section is a statutory right given to the company to remove, by ordinary resolution, any director in whatsoever manner or on whatsoever terms appointed. Proviso 1 to sub-section (1) only exempts life directors who ere holding office in private companies on 1st April, 1952.
This section, no doubt, provides procedure for removal of a director of a company by ordinary, resolution at a meeting of the shareholders of the company, but the section is not exhaustive. A director may cease to hold office by retirement, dismissal, removal, or by vacating his office voluntarily. He may be removed by the Board of Directors or shareholders at a meeting of the company. Section 284 mdrely provides for removal of a director by shareholders and prescribe procedure for the same, it does not prohibit removal of a director otherwise than in accordance with this section. Sub-section 7(b) lays down that nothing in the section shall be taken as derogating from any power to remove a director which may exist apart from this section. The section itself therefore contemplates removal of a director in addition to the provisions contained therein. Thus, where the Articles of Association confer powers on the Board of Directors to remove the Managing Director or other Directors, such power is not affected by the provisions of Section 284.
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